WHAT IS REALLY UP WITH AFFILIATE PROGRAMS - SHOULD YOU BOTHER?

By Carlos De Paula

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You might have seen ads for myriad seminars claiming they will tell you the secrets of making millions with affiliate programs. There are plenty of books, CDs, DVDs, sites, etc, promising affiliate riches for savvy businesspeople such as yourself. You might have spent quite a few hundred dollars on such programs and discovered, at the end of the day, that they are as much as a dud as the schemes involving federal grants. So, if you have not spent those hundreds of dollars yet, read on. I hope you do not take that foolhardy step.

Are there people or companies making money with affiliate programs on the Internet? Sure there are, but if your site does not have multiple hundreds of thousands or millions of page views a month, don’t bother applying. I speak from experience.

This is not another one of those “sour grapes” articles, written by a failed entrepreneur and meant to discourage people to do things “right”, just because the author failed, because “he did it wrong”. It is neither an expose, although, I suppose, there is a little willful bad faith in the affiliate hype. As a disclaimer, I did not spend the hundreds of dollars on CDs, DVDs, books and seminars, so I do not have any axe to grind with these companies/individuals. Most of my learning has been done the hard way, with independent research.

The real heart of the issue is whether such money is available for start ups or small operators, such as yourself. I reckon that if you are reading this article, you are likely not the webmaster for Amazon.com or yahoo.com, rather a well meaning individual who wants to make a few bucks on the internet - after all, everybody is supposedly doing it.

Affiliate programs seem a good bet on theory, as they link your site with major companies, including Fortune 500 companies, and the financial perspectives are almost endless. In theory, that is. The problem, though, is the same for everybody: traffic, traffic, traffic.

I have had a traditional store, and I have a webstore. Whereas most of the people that entered my traditional store bought something, their overall number was small, sales volume low, expenses high. In my webstores, I get more than 15,000 visitors a month, and on a good month, 1% might buy something. Don’t be disheartened, this is how the internet works. Huge numbers to see any “action”. Webhosting costs surely beats New York commercial rents by a mile, so all in all, I am better off now than then.

This should show you something straight forward:  that 1% of the people that enter my pages will actually dish out any money (and this is a good ratio), and 99% do not. What makes you think that hundreds of people will click on your affiliate banners and actually do business with your advertiser, if even  your total page views per month are lower than 10,000? Mind you: you still need huge numbers of clicks from your site to generate actual sales, as only 1 to 2% of the visitors who click to begin with might actually make a purchase from your advertiser. So we are really talking about 1% of 1%! So make the calculation yourself!!! 

So the big million dollar question is, how to get enough traffic to actually generate affiliate income. Many wise guys will try to extricate further money from you with promises of improving your google rankings, telling you that what you need is in fact better search engine position. That is a half truth or half lie, depending on how you look at it.

The reality is that search engine position is meaningless if your site lacks content. No content, no affiliate income. No content, no multiple search results. And I am not talking a couple of hundred pages, I am talking thousands upon thousands.

I am not exaggerating. First of all, in order for a visitor to click on your advertiser’s banner, he/she has to stick around in your site for a while. The 30 second visitors are no good. They either have not found what they want in your site and are unlikely to click on your affiliates banners or do business with them, before leaving your site forever, or they are the worst type of compulsive surfers that plague the web, for the lack of something better to do.

So you have to grab the interest of your site’s user, enough to warrant repeat visits. Fresh content will definitely help on this context, and original content even more. But again, you have to add thousands and thousands of pages, to ensure ever increasing traffic.

In my first 6 months with affiliate programs I made a whopping zero dollars. I signed up for over 30 programs, in three different sites. Even sites that required no purchasing (all the visitor need to do was fill a form), generated zero dollars for me. My combined readership is over 100,000 page views a month, so, in 600,000 page views about 6,000,000 ad impressions (not all 30 banners show in every page, on the average, only 10), I got $0.00. Ouch!

I believe that one of the reasons for this failure is that my sites have quite diverse content, they are not specialized. Perhaps, if I did concentrate in certain subjects, and signed up for affiliate programs specific to these areas, I could earn some income. For instance, if my site were about medicine, and all content medically related, I was bound to make some money already.

I did find, however, that the actual clicks to the affiliate banners numbered in the thousands. So what is up with that?

Well, we go back to my first thought. I got thousands of banner clicks, in the whole, but  not enough to even approach the individual 1% threshold for sales I get in my own webstores. So I am still mathematically sound, but that does not in any way help my bottom line.

So the people making money with affiliate programs are the large search engines, newspapers, magazines, and huge content and e-commerce sites. A few, subject focused sites with lower traffic might also be doing OK, but forget about millions.

You might ask then, why do companies create affiliate programs, if most affiliates do not generate enough clicks to generate hard sales? Guess what, you are providing free advertising for them, just like I am providing it for the good folks on the left frame of my site. Their logos are still being plastered all over the place, without their disbursing a single cent. They do not come out losing at all. In a sense, you don’t either, as known advertisers add to the seriousness of a site. 

I would say that a program such as google’s adsense might be better for small time web operators. This still requires thousands of pages of content and substantial traffic, but you make money with every click, rather than business transactions that never happen. If you click on my adsense ads above I am making money; on the ads on the left, you got to make a purchase. Read my article on keywords and you will find out that the top Internet searches and most expensive keywords have little to do with each other. It is easier to get people to go around on your site clicking on google ads which are going to generate a few cents here and there, than to get a person to click on a banner and spend a few hundred dollars that will earn you about $5.00. Altogether, adsense is a better deal, and might earn you a couple of hundred dollars a month.

That said, a word of advice. If you do have a webstore, don’t put adsense in it, because all it is going to do is retrieve your competitors ads, and dissipate your sales. They will leave your store, perhaps forever. The cents you are going to earn with the click are not worth the dollars you might lose from your prospective customer.

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